The present disclosure relates generally to credit application evaluation and loan processing, and more particularly, to an integrated method and system for expeditiously determining the credit worthiness of a borrower and processing a loan using an electronic lending platform format.
When a consumer is interested in financing a prospective purchase of a good or service based on credit, the consumer typically completes a credit application for review by a potential lender. This type of application can be referred to as a direct transaction and is as follows. In a direct loan transaction, a credit application usually requires the applicant to provide certain sensitive personal information, such as the applicant's social security number, date of birth, or the like. This information is submitted by the consumer or on the consumer's behalf by a third party who does not participate in the credit decision process for the given application and in consideration for the consumer to receive the lender(s) response directly and that the consumer will chose to apply contract with one such lender as applicable directly.
This contrasts with an indirect loan transaction in which the consumer is approved through the sales entity at which they are purchasing the goods, product or service(s) and that sales entity functions as the source indicator for financial institution(s) who will ultimately purchase the completed loan application and exchange the collateral with the selling entity subsequent to this transaction. In reality, the selling entity is the only creditor and is the decision making entity that determines whether the newly acquired asset will be resold or retained.
In an indirect sales situation, the seller may transmit the completed application to one or more lenders for evaluation. Each of the lenders, in turn, submits required credit request information to a credit-reporting agency based on the information in the completed credit application. For a fee, the credit-reporting agency generates a credit report and associated credit score and provides it to the prospective lender. The information is then transmitted from each of the potential lenders to the seller. The seller then identifies the financing options available to the applicant based on a comparison between the credit report and associated credit score and the lending criteria of various lending institutions. This process as described may or may not subscribe to industry best practices and/or comply with current and future lending requirements and regulations. Furthermore, the process as just described is cumbersome and generates unnecessary actions that can have undesired effects on the consumer and/or financing source. It would be desirable to provide a platform that would identify whether the transaction was to be a direct transaction or an indirect transaction and would allow all participants involved in the transaction process to conduct the transaction efficiently, economically and in compliance with current and/or future lending rules, regulations and requirements. It is understood that indirect transactions as that term is used herein include transactions referred to as credit sales or Retail Installment Sales that are governed by retail installment sales contracts (RSIC) It would also be desirable to provide a system and methodology that allows the participants to the transaction to increase the likelihood of successful and compliant application transaction consummation by a variety of prequalification indicators including, but not limited to, information vetting through a series of checks and balances prior to submission of a completed or near-completed application.
Conventional credit approval processes can be slow, very time consuming and often results in a significant amount of wasted effort on the part of those involved, especially if the applicant has a poor credit history. Moreover, the process can be costly for the potential lenders, and can adversely affect a consumer's credit score, such as if a credit application is denied or due to multiple “pulls” of the consumer's credit score by different potential lenders. Once the applicant is approved for the loan transaction, then other unrelated parties may be involved in structuring and finally closing the loan. In instances where the transaction involves an RSIC, unrelated parties are not involved in structuring or closing the sale and are not to be permitted access to the consumer credit information.
Thus, there is a need in the art for a faster, more efficient, more cost-effective credit application process that uniformly makes credit determinations earlier in the loan application process. Further, there is the need for an integrated system for executing the approved loan.